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tv   Bloomberg Markets European Open  Bloomberg  January 23, 2017 2:30am-4:01am EST

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♪ anchor: good morning. you're watching "bloomberg markets: european open". i'm in london. what we watching today? the trunk slump. the president's first few days in office star concern. the reflation rally now running its course. the prime minister is set to announce industrial strategy today. a supreme court decision on article 50 tomorrow and
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president trump friday. how special willis relationship relationship be? this change at all the electoral map in france? let's talk about where the markets are. value regulation of a negative start this morning for european equity markets. as well negative. we are opening round 20%. some reason for that, what we are seeing in the foreign exchange market. the dollar down again. j1.1%n, up very much a dollar story in the markets right now. the pound is a .7% let's look at the first word news a break -- update.
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juliette: a busy time in washington dc as donald trump begins his first full week of president. he will meet for me some a friday to talk about a post-brexit deal. for a process brexit deal -- a post-brexit deal. team is also stepped up the war with the u.s. media over the size of his inauguration audience and what his aid called "alternative facts". the secretary of state certain to be confirmed as key republican critics drop their opposition. john mccain and lindsey graham say they will vote for rex tillerson despite his relationship with russia. mccain says he deserves the benefit of the doubt.
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china state media used all trumps inauguration to warn about the perils of democracy. ,ccording to the people's daily democracy has reached its limit and deterioration is the inevitable future of capitalism. the paper touted the rebels of --bility of the stability a stark view of what brexit means for britain. he told bloomberg that the u.k. will have to get rid of much of the safety net. 830% decline in wages in the next 20 years to enable the pace. the effect on his business may be different. guy: sadly, this is one of the strange things about business, i think it is probably bad for the majority of people in the country but my business it is going to be good. turkish lawmakers have
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given their approval to earn to show sweeping executive authority. in favor of making him head of the executive and abolish the job of the prime minister. the move triggers a referendum that could be held in early april. the changes would concentrate a dangerous amount of power in a single authority. news 24 hours per day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloombeg. slumps withlar donald trump's first three days in office. he begins his first week in office looking to make good on a collection, america first campaign promises is an meeting with business and labor meters leaders. issuing a number of executive orders today. a confirmation vote as we were hearing from rex tillerson.
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let's bring in stephanie baker. what did we learn over the next couple of days? stephanie: he risks a lack of focus because he has so much on his agenda. where does he start he signed an executive order on the affordable care act trying to give agencies the ability to interpret it loosely. he still need congress to repeal the law. he said yesterday he is going to be meeting with the prime minister of canada and the president of mexico to renegotiate nafta. we will have to see how much room he has to maneuver there. nafta or --nge to he could face opposition of --ublicans who are
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was what this weekend did make very clear he has a number of things he wants to do quickly. congress barely has its feet under the desk and is going to look at the long-term figure of how to make that term. work. he is upset with congress for being so slow to confirm his nominees. they are off to an adversarial start on that. he has broken with the mainstream republican party on so many issues. he does face opposition from them on trade, the place where they do have shared support is on tax cuts. would imagine he would push that fairly quickly through because republicans have been supportive of that. on things like infrastructure
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spending which he mentioned in the inauguration, that is something the democrats have .een pushing for quite a while republicans have resisted that because in the traditional republican policy world they want small government and are not supportive of the projects. there is going to be a fight over whether or not he will get funding for that. guy: thank you very much indeed. the first hours of the trump presidency. has the reflation trade run its course, the markets may be looking at a scenario. the divergence, you can find this on your terminal. this is the u.s. five-year future. this is leverage money. going down. this is asset institutional money, coming up. summary which one of this is going to be right because some but he and it's will staying -- somebody is gonig to be wronga
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nd -- and it will sting. psychologically, i don't clients are going thanks goodness -- psychologically clients are going think goodness. people are very optimistic about what was going to do. more fiscal stimulus, a bit less qe and return to normal. seeing what we are now is it will always be hard. the optimism is way ahead of what he will be able to deliver. along the dollar, i would not call it a crash yet but it think there is promise to be had and people are now taking them. guy: can these different groups be wrong? " we go back to where we were. il: despite a tapping on the
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brakes of the federal reserve nobody is thinking they will raise more aggressively. even they don't know what president trump will do. if he does get fiscal stimulus through and get infrastructure spending what you and i know is the rates markets, possibly the dollar, or under expecting economic growth and the u.s. assets. china agreeing a next five-year plan in november. guy: how is what you are doing reflect that? we think the dollar will go up instead of down. if trump does get fiscal stimulus will make the u.s. a more attractive place to be. the more the central bank talks about not reinvesting, the saudi's and chinese begin to divest, you will have a supply mismatch which require yields to rise in the treasury markets
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anyway. a lot of international investors, particularly yuan -- european investors, if you are european or japanese insured you will look at 10 year u.s. interest rates and say that looks attractive for no risk. you -- negative on the german market. --s is the u.s. treasury number two at the moment. do you expect that to go higher? the u.s. starts to back up, the rest of the world markets are correlating. even the u.k. is going up. if you look at the fx hedging, that's probably only a 30 or 40 basis for pickup. you're not getting the 2% if you want to hedge your -- the dollar will go stronger, what we don't know things like the border tax. if you listen to what he talks
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about, it happens the way it is described in the press kit could increase the dollar from 10-15%. a huge step change and a great return on the dollar assets. guy: stay with us. -- later on the show, you can't have your cake and eat it too. what he said about theresa may. paying for the plan, how will donald trump funds be of a structured goals and what does it mean when the debt market? opec and nations struck a deal on monitoring output. 20 more still to come. this is bloombeg.
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guy: 15 minutes until the market opens. here's juliette starling. juliette: samsung electronics batteries made by an affiliate. that is who they blame for the flammable fiasco. overheating and fires were caused by separations in the batteries which were too thin. the company apologized and promised to strengthen battery safety. investedaid it had $130 million. lifting alines grunting order in the u.s. after problems from computer failure. the mystic airports will affected for 2.5 hours.
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the third-biggest u.s. carrier had 400 and one delays -- 481 delays. oil producers have already cut supplies by 1.5 million barrels per day since january 1. more than 80% of their target under last deals -- last year's deal. agreements they have had. indiana agreed on monitoring to ensure 100% compliance. mitsubishi will perspective every of japan's first domestically made passenger jet by two years. to company revives systems make latest requirements for certification. 2013 marksshi jet in the fifth until a that delay by the company. brexit will be good for his
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business, but not so good for the majority of people in the u.k.. the head of the biggest private equity firms told me friday that prime minister theresa may will have to step up competitiveness after leaving the eu.
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minister will announce the industrial strategy later today. she is going to the u.s. friday and meet with trump. >> i think we need to review the structural reforms we need. we cannot afford the wealth -- the health care pensions. 45,000rage briton saved pounds. less than two years of what they earn. we are not taking our commitments to the future seriously. where he has been naive is the change in political trend. democracy will not allow him to keep margins and billionaire status while people go begging in the streets. dr. c will seek to make the world less wealthy a place.
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equal in terms of earnings and income. guy: do industrial strategy is worth? is that part of the process you're talking about? neil: like america, having 10% fewer gdp coming from industry, is too small. obviously a week sterling will help competitiveness but she needs to get the right structural reforms to encourage more people to go back into engineering so less people do media sciences and the softer universities. guy: once that do matter in the financial sector. . delete quite through the --\
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guy: are reviewing 2017 and we have an issue in europe it could easily mean that we never leave you if we get control of our immigration -- what we are going to see in all directions is a move toward more local nationalist or populist policies. even if marine le pen does not win, she is going to be very important in terms of the direction of french politics and policy. i think we could end up in a november or december with a scenario where europe is looking to say we want to control more
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borders. we want to control immigration. all issues that were alive and kicking in the brexit review. situation can see a where it is up with leo that the u.k. gets what it wants. we all vote to stay in the common market in the u.k.. there are political scenarios you could see things turn in the media. scenario --errorist a terrorist scenario? neil: yes. give me a sense of how that works from the investment point of view. neil: we think sterling is undervalued.
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we think inflation is likely to overshoot rather than undershoot. the bank of england is the wrong way around. quantitatively easing --guy: sterling and inflation? neil: yes. what we are seeing right now with retail sales last week, the weakest sterling is feeding to the higher prices. we may find food starts to rise. you and i will find we have less money in our pockets. thinking he doesn't need as many of us and doesn't have to pay us as much. guy: minutes away from the markets open. a few interesting stock stories out there. we may see a bit of merger activity. home brokers -- homebuilders along speculation could be to stocks on the move. i can barely see the bonnet on the drive on the way in. that is what london looks like. transparent start
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to the working week. eight minutes until the market opens. this is bloombeg.
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guy: minutes away from the market open. five minutes, but stuck about the stocks we are watching over. lights is the ticker. in another miss, here is the thing. buybacks. we do see return of money. shareholder dividends, etc..
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despite the small missed you may actually see that factor being and more important one in terms of the way investors pursue this one. papers, a bovis berkeley merger story you may want to pay attention to this morning. it does seem that this could be something the schroders may have interest in. what is happening with the dollar this morning, keeping an i on anything dollar related. it will certainly be a factor for what happens in commodity stocks. that could be a significant story. member we do have the industrial policy being announced by theresa may later on. companies,e technology, life sciences that may have some derivative effects of that. it does look like we will see openings this morning, opening
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around .1 percent the market opens next.
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guy: you're watching bloomberg markets. the european open. i'm here in the city of london, moments away from the european trading. here's your morning brief. the truck stop, dollar declines in again. s == -- trump slumped. big week.y's the supreme court decision on article 50 tomorrow and meet president trump friday. how will that special legendship developed? how special will it be -- how will that special friendship develop? how special with it be?
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changing the electoral map in france. a softer opening this morning, what is happening with the dollar. it is down, the yen is up, the pound is up as well. how will that be factored in? the market is opening as we speak, let's give you an idea of where we are going. there is the london market softening up a little bit. paris is softening up. the ftse 100 trading below 72. down .2%; the devil is in the details. anus: a personification of what happens next for the dollar and the trump trade. you haven't yen rising by 1%. bloomberg dollar index down by .05%. momentum in the dollar is beginning to end back. if you look on the far side of the screen, copper is up. tunnels in hisnd
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speech on friday. spending money as a commodity complex. gold is slightly better. european market opening, slightly more risk this morning in terms of momentum. $2 trillion has been added to the value of equities since donald trump won the election and november. how does this transport to the earnings season? what is goingn of on in terms of european stocks is the lowest in almost six years. newsll be the actual around the results of the likes of the main heartland of the income generators in europe that will move the stock price. not necessarily -- that correlation is the lowest in six years. this morning,ter you're seeing that run the curb.
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does it continue? those markets. everything in terms of stocks to watch. good morning. in all stocks to watch this morning. i picked three to focus on, a couple because of numbers coming out. starting the philips lighting seeing a wider profit margin in 2017. the world's biggest general lighting committee by sales. andmargin why did this year they asked the return of more than 300 million euros shareholders. are liking this result. up 3.5% at the open. flatg on to paddy power, revenue. they favored customers in a statement, flat on a constant currency basis. line with guidance. we are waiting for that to shift
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a little bit. right now waiting to see a reaction in alley ends -- a llianz. they are interested in generally allianz lower at the open. guy: thank you very much. italian bonds could be a massive home run. a couple of blocks talking about -- first of all, do you agree? >> i think i see the shorting of the sherman -- german bond is a money losing trade for investors. or just inflation rate losing money in terms of purchasing power by owning at the moment. we have two other factors, the
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world of the financial markets needs collateral. there is nothing better than a german bonds. a huge demand from the investment banks and commercial banks. on the other side it is a hedge. a positive hedge against --guy: this is been a trend that fascinated me. i have heard over many years since 2000, all the theories about how durable ends up breaking up and the eurozone breaks up. how you should hedge around that. they were all incredibly collocated. buying the bund isn't. this year, we think by the end of this year, even if everything goes well and we don't have a brexit type of event in europe we think europe as to keep the legitimacy of its democracy by moving forward. the europe needs to shrink to grow. maybe there needs to be a core group who will put all the fiscal additions in place, the
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capital in place to make it look like. i would say the markets will speculate about who is not in that group rather than two. guy: there is a region nomination risk that surrounds that. the bunt tradef is huge. what kind of upside what i have is your scenario came through? ,eil: there is germany flipping yorba linda would be worth 20% more if you got a deutsche mark. you will want to sell it quite rapidly after that. countries likeve italy that might out at the bottom. that is the way you would see it in terms of the calibration of risk. guy: if this anglo-saxon wishful thinking? neil: i think people underestimate the desire of many
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politicians in europe to remain in europe. the pention is whether has the same political dna that maybe every other politician you and i have ever had analyze has had. foron still want something guy: france. hold the french politics, we will talk about that. how much positioning inside the boat at the moment is inside this trade? neil: i think the default for the big insurance companies enjoy the bund. it doesn't matter what it is priced at, they don't manage it in that way. with the cash they see coming in the in there businesses they would not be buying the bund they would be looking to make more risk and return. guy: we will get into the french story next. stay with us. france's presidential primary
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takes the first round of voting. leftistt voters any policy. certainly fits with france. globe.g the opec and other nations struck a deal about output cuts and exit wounds. steady decline in u.k. wages over the next 20 years. on that interview later in this program. this is bloombeg.
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♪ guy: welcome back to the european open. 10 minutes into the session. let's check in on the markets to show you what is going on. and negative session, even more negative it in the first pricing and. downy around her down -- by eight rounder point. stoxx 600, i have set this up on percent exchange. generally a big move. the gold miners are trading high. let's change that percentage thing to an index point. downside, banks. unicredit, hsbc, both weighing. incredit is the biggest hit
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terms of the stoxx 600 this morning. it is down. generally is the biggest positive performance. glencore, all morning -- all among the gainers. and some of, banks, the swift stocks in particular giving back of the ground and acting as a break on the market this morning. let's get back and talk about what is happening in the political story around europe for . if party rival in the presidential primaries, serving francois hollande has already announced people seek reelection. polls search a surge in support for alternative parties. the socialists seem to stand a chance. in terms of what happens, out of
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the blue, did they actually change anything for the electoral world maps in france? it may have consequences for the election. it is interesting to see that just like we saw during the primaries, it has now become a front-runner. wing.ore on the left an admirer of bernie sanders, he was kicked out in 2014 of government because he criticized the economy policies which he said were to liberal or two pro-business. heritage offend the credit. the almost impossible task. if you look the consequences, very interesting if you look at
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what was public for the weekend. a victory next sunday would actually boost the chances of emmanuelle to potentially eliminate either marine le pen or francois fillon. it would make it harder because emmanuel macron with take it from the center. statesry similar in the as in the u.k., bernie sanders as well. latest? what is the reporter: marine le pen is serving on the populist wave that we are seeing in europe with brexit and the rise of populism. she has rallied in germany over the weekend with other published antiestablishment policies including the freedom party.
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been attacking immigration policies ofj angela merkel which he called a catastrophe. marine le pen said we are seeing the end of the old order. pen: the thing that will set off a domino effect that will bring down all of europe is brexit area suburb people have decided to leave in agreement of the powerful to decided some destiny. the second blow came afterwards in the election of mr. donald trump in the united states. putting the friends of neoliberalism in a difficult situation. barehand her call for the end of the old order is a change of the entire political system as we know it in france. to be le pen almost sure
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president in the second run of the elections. blackcomb bypassing the primaries and running as an independent. this might also mean the death of the socialist party in france. very much indeed. neil, let's bring you back into the conversation. is somewhat sensationalist. marine le pen doing very well. a two-out process makes it difficult. neil: if -- guy: this is the spread it, stock 49 at the moment. is that something that interests you? neil: not really. we would expect france to be a core part of the europe going forward. the reason i would say not really is because we are focused primarily on holland and how much the populist movement moves there and the potential consequences. trade-off being
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marine le pen will get into the final round but france will not elect her. of will color the policies mr. fillion. she will not get elected and wanting to play that roller coaster will she or once -- won't she is not something i want a with audience. i think she will appeal to a lot of socialist voters because it the independence party. they appealed to both sides of the house from a working -- guy: economically they are conservative. socially they are the opposite. the: she will be pitching first france agenda that britain and trump is doing. socialist is what we have to watch for, where she makes that appeal successful. the that could give her better
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credibility. guy: economically you are more to the left? immigration you are to the right? neil: yes. guy: the netherlands has a better credit rating than germany. liquidity issues surround dutch bonds in they don't trade in the same way. is that something is should be paying attention to? neil: we think it is one of the more likely faultlines. if you go back to when you and i were doing brexit over a year in 1973-5, theg country is felt most global at this time were the dutch. depending on how we see them move forward particularly in the lead, if he were to create a dynamic because of a brexit or swing, hed type of could cause a genuine trouble at the core.
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it is not a central case but one thanose more likely electing marine le pen. guy: a bit like france. neil: we don't know how far everything may end up swinging. they are very sensitive to how much the dutch central-bank has led to the ecb. i think they are concerned that they are all already bust because of the money already put through. they may have a good credit rating but are they going to get it back in the euro? guy: nigel farage is one of the classic cases. ineffective at the ballot box in an inability to generate a footprint inside the palace of westminster. one of the most effective politicians in europe in changing directions of an entire nation. you can argue the builders have the same effect, look and can have the same effect. maybe actually more electable.
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peoplei price these changing the balance? they are not likely to lead but they are. they are more pushing them leading. we are going to see more trade friction, more deglobalization. more what is in it for me. you look at european policies. the changing status of nato. a dutch look at it from perspective saying how is this going to help my local economy? if it will not help the dutch they will not remote it anywhere near as much we used to in the past. i think that is where we are headed. trump is clearly the key politician to work with at the moment because if he does become oruinely trade protectionist friction full, that's will hurt the european union. nobody will be a beneficiary of that. where is the markets most
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mispriced? neil: he is just going to do a qe. he will not do anything else unless something actually blows up. the monetary policy is priced in so as much as i think we will get volatility that bond market if youo be quite safe get to the end of the year and we have not had a blowup they are mispriced and should be higher. guy: we nearly got through an entire program without mentioning a central bank. we got so close. that is one the biggest shifts we are seeing right now. great to see you this morning. nz. for europe at allia continuing to skip hand-in-hand
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with the agreements on compliance. this is bloombeg.
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♪ 23 minutes past the hour. you're watching bloomberg markets. here is sebastian. busy in washington dc as donald trump begins his first full week as u.s. president. he will meet theresa may on
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friday to talk about post-brexit. the white house has no intention returnssing his tax breaking a promise saying he would do it when the auto was completed. terms quote alternative facts. his pick for secretary of state looks almost certain to be confirmed as key republican critics drop their criticism. john mccain and lindsey graham saying they will vote for him despite his concerns with russia. warning about the color heralds of democracy. the flagship paper of chinese communist party, democracy has reached its limits and the deterioration in the future of capitalism. a reshuffle of senior leadership.
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global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloombeg. guy: international producers have a great way to monitor a supply deal. a five manner monetary committee . yousef, complaints full would be one of those big concerns. how does this deal work? yousef: this was always the very crocks of this whole issue. a few more clues from the russian energy commissioner. you have a five meter -- five member committee, russia and kuwait. they will take it from producers and secondary sources. it will then evaluate on that basis. the key element to this equation is are you counting production or are you counting export?
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they are counting production. what is coming out of the ground. as we know, 1.5 million barrels out of the system and saudi energy minister is proud of the progress being made. don't know what happens when somebody doesn't listen. penalties that could be imposed, there is still no liberty on that front. guy: very briefly, be trumped story about making the u.s. independence from opec. what effect is as having customer -- if you look at the amount of imports from the opec group you are looking at 3 million barrels per day. i would keep an eye out on this chart here. this shows you right there. guy: thank you very much indeed.
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what to expect in terms of expanding productions in u.k..
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you arecome back, watching bloomberg markets: european open. let's talk about how things are shaping up 30 minutes into the trading day. as you can see, negative. a number of the italian stocks are interesting this morning. unicredit the financial center, front and sector. ftse 100, in some ways doing ok because of the miners, but it is being dragged in other directions because of the pound. let's find out exactly which stocks are moving. here's nejra cehic. nejra: we are seeing weakness, if you look at the indices as you have shown, but i am
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focusing on three of the biggest movers, starting with philips lighting. we were seeing gains of 3% earlier but we are still high on this stock after the world's biggest general lighting company said its margins would widen in 2017. we spoke to the company's ceo earlier, who joined us from amsterdam, and he sees growth toward the end of the year. re it is true that we we impacted by some markets, and we highlighted the middle east and , so we believe that these impacts will have a much lesser magnitude in 2017, and this is why we are confident that the company will return to growth in the later part of 2017. ceo,: the philips lighting
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speaking to us earlier this morning. the biggest gainer on the stoxx 600 at the moment up 4.7%, this is after two companies are said to be interested in this company, according to reports. we have seen generali jumped the most on those reports, although they didn't fight anyone and we don't have a huge amount of detail. a,wanted to show antofagast industrial metals rallying. although we didn't get a lot of detail from donald trump on friday, one thing he did do was reiterate his plan for infrastructure. we have seen copper hit a record, aluminum at its highest since 2015. in general, industrial metals rallying. higher.sta moving guy: thank you. terra firma chairman took a stark view of what brexit means
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for britain. he says the u.k. will have to get rid of much of its social safety net, and may see a 30% decline in wages in real terms over the next 20 years to enable it to compete outside of europe in an interview he said the effects on his business might be different. >> because britain is going to have to continue to borrow money, and we won't have the european union and people will put at risk premium on it, interest rates will start to go up. that will lead to bankruptcies, and it will lead to opportunity. have,,and this is only one of the strange things about business, i think it is probably bad for the majority of people, and in fact the country. but for my business it is probably going to be good. guy: on what kind of scale? how good does it get? how big will the opportunity be?
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you talked about a 30% reduction in wages -- interest rates -- how high will they have to go? >> when i say 30% reduction, i am talking in real terms, over 20 years. that's a very small change each year. it's similar to a frog getting boiled, so it won't be quick, it will be slow. in terms of interest rates, that's going to take some time as well. but the u.k. at some point will have to continue to pay for its debt. people talk about the j curve. the j curve, in terms of devaluation, has never worked in the u.k.. u.k. did it for 200 years in the european union, constantly devaluing. we never, ever did. the only way we could continue to pay for our debt was with increased interest rates. how much, i don't know. but the differential between us and europe will need to be several percent. guy: the british government says
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the brexit vote was not a vote for the u.k. to become poorer. hands disagrees. a big week for a theresa may. today she outlines her industrial plan in u.k.'s supreme court, which will rule on whether she can legally start the brexit process without parliamentary approval. then, rounding up the week, she travels to washington to meet with president donald trump to discuss trade. between the countries. britain is set to leave the eu, and it was interesting to hear earlier from neil duane, that he didn't think it would end up happening. we will talk about that later. let's talk about the big week for theresa may. we're joined onset. week and youat the figure out what theresa may is going to be most concerned about, geared up for, which event is it? there are three big ones. >> symbolically, friday is the big deal, because it will make all the headlines. the concrete trade deal is very
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much up in the air. we can't do much until we leave the eu. tomorrow is the big one, really. the government has publicly said, of course, it wants to win the appeal. privately, many of her advisers have admitted that they will probably lose it. what this means in practice for whether parliament gets more scrutiny on the process of leaving the eu is the big question. guy: i have heard that there are four pieces of legislation being lined up to make sure there's a way the government can find a way around this. the case,re to be what will the relationship be between parliament and number 10? >> i think the issue here is that there is already quite a lot of opposition from the center. this is the center of the conservative party, the center of the labour party. there's already some noise about
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mp's not being happy with the kind of deal she has set out, which is a de facto hard brexit. roughshodes to ride over more elements of parliamentary sovereignty, then she is likely to run into trouble. is is a prime minister who has a very small majority. guy: let's talk about friday. what's going to come out of it? >> warm words, a handshake, a good photo opportunity. guy: industrial policy? >> well, we are going to get to the war words on trying to diversify the british economy. we have seen some targeted measures already, or promises of them. the targeted measures to boost -- the chancellor believes it will reduce food productivity, improving waterways, local infrastructure. today, more investment in science, research -- which has been a big push for the u.k. -- it can transform the fortunes of
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the british economy -- in the meantime is a force that remains to be seen. guy: apparently we are not picking winners. it would be nice to see them becoming a little more numerous. thank you very much. trump's arrival at the white house could force europe to address its long-standing issues following a barrage of criticism before his inauguration. joining us, john for lane. we know what happens in terms of the security story and how much people will have to spend of donald trump gets his way, with politics is much more interesting. why could donald trump be good for europe? >> well, it depends on how optimistic you are. basically, trump is a bit like him throwing a stone into the stagnant european pool. it could be constructive criticism, the assault that trump has made, because it forces europe to decide very
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quickly what kind of the europe and wants to be. it's a question on whether they managed to forge a response or not and how quickly, because he could be moving faster than the european leaders. guy: talk me through the reaction thus far. ofthat reaction reflective the kind of bifurcation you are potentially talking about here? >> well, the first reaction was surprised. but after the shock of his remarks, now there have been many public cases of unity, one of them made by chancellor merkel. we heard the dutch premier talking about the need for a new focus on economics, on the growth of europe. you have other countries talking about the need to try and decide if views such as defense spending or whether we should stick with german-led austerity, or and try and go offer more investment and growth. of the make a lot
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effects that trump could have for politicians like marine le pen. do you think that effect is being overdone? for some people it is being overdone or the populists. the nationalist movement had a meeting in germany over the weekend, and they were all hailing trump's success. but of course, these populist movements, there are divisions between them. the common thread for them, at least, is that this is fueling the anti-establishment, the disenchantment for globalization, and they are very much banking on the brexit effect and the trump effect now becoming an effect for the elections this year. guy: john, great stuff. great piece. next, marine le pen versus macron. the independent candidate looks to be gaining ground in the campaign as support for his socialist rival starts to wane.
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this is bloomberg. ♪
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guy: welcome back. let's talk about these markets. we want to take it to the gmm function. the yen is up, the dollar is down, and we are talking about quite significant moves. the dollar weakness is seeping into the pound, trading 1.1 254.5
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european stock markets are down, the dollar once again dictating what is happening on global markets. let's get a catch up on every thing you need to know with the bloomberg business flash and sebastian salek. sebastian: samsung batteries made by an affiliate were to blame for the flammable note 7 fiasco. it says was caused by separation film in the batteries. the company apologized and promised strengthened battery safety. they have invested about $130 million in safety. united airlines have lifted a grounding order in the u.s. after problems resulting from computer failure. all planes were affected for about 2.5 hours. the third-biggest u.s. carrier had 481 delays on sunday. saudi arabia's energy minister says opec and other producers have cut supply by 1.5 million barrels per day since january 1.
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that is more than 80% of their collective target under last year's deal. he says it is one of the best agreements i have ever had. oneeting in vienna agreed 100% compliance. hong kong maintains its rank as the most expensive housing market among 406 major metropolitan regions for the seventh year in a row, according to an international affordability survey. 70, meanwhile -- sydney held its record is the most expensive market in the world. that your bloomberg business flash. guy: thank you, sebastian. the french left has seen former prime minister full behind a party rival in the presidential primary, this as polls show a surge in support for alternative parties, including the national front.
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let's get back to paris and caroline connan. over to you. caroline: i'm joined by a political analyst here in paris. bruno, good morning. >> good morning. gain, the once a other man has turned the front runner. this anti-establishment feeling we are seeing. > i don't really think -- he's used to be minister for education, but it's clear that people werelitics, explaining that we have to change the agenda of policies and friends. hollande proposed a radical change, and there's a clear sign that his policies are that something is going wrong with the old policy.
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caroline: it's an impossible task for the foreign prime minister, who has to defend the policies of president hollande. >> it's a very good challenge. -- the prime minister was clearly someone [indiscernible] caroline: you have [indiscernible] would boost the chances of emmanuel macron. does he really stand a chance against marine le pen? >> i think emmanuel macron [indiscernible] emmanuel macron, according to the figures, is the third candidate. macron wouldthat -
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get [indiscernible] still, it is possible. caroline: to you think that the socialist candidate could possibly rally emmanuel macron in the next few weeks? >> yes, i think it's extremely likely. we have seen over the last week that they are colleagues -- caroline: with the entourage of the president. >> yes, the close entourage. yesterday's results are a clear indication that emmanuel macron will qualify for the second round. course, the world is really questioning -- is it
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really possible that marine le pen wins this election? >> i don't think that is -- [indiscernible] caroline: so she might have to wait until the next election. back to you. guy: caroline connan, thank you. already having an effect on french politics. up next, emerging-market currencies are getting a boost from the falling dollar. we will discuss the msx, next. -- e.m. affects, next. ♪
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guy: 8:52 in london. what does it look like? you can just about see across the thames. it's not exactly transparent, let's put it that way. the ftse index is trading down by .8%, while the banks and pharma stocks are under pressure. wire the miners going up? a number of factors around the world effecting global equity markets, global foreign-exchange markets. the bloomberg dollar index is down by .5%, which means the yen is up by .9%. it was up more earlier. the british pound is trading at 144.40, ripping into the european equity markets. let's change this to g-20.
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yen, the bloomberg dollar index, look what's happening with the brazilian rail, the won trading up, the renminbi up. a number of different factors coming into the next this morning, that appear to be trading up. the dollar is the big story. we're on to come back to that. we will run around exactly what's happening. let's talk about the highlights in the week ahead. syrian peace talks getting underway and cause asked on. whether theresa may can trickle article 50, to mexico speaking in germany. takes's prime minister questions in parliament thursday. and with theresa may in washington, fourth-quarter gdp data. as i mentioned, the dollar is
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certainly one of the factors influencing global markets, being driven lower again, and that is having a bit of an effect. the msci emerging market currency index is up 1.8% since the start of the year. tracy alloway joins us in abu dhabi. tracy, the big trade was to be short em, long dollar. how is that working out? tracy: [laughter] not very well for some fund managers. i was just reading a bank of america merrill lynch note, and they were talking about how long the dollar, short em currencies is turning out to be the pain trade for the year. it's kind of coming into playoff the back of trump's inauguration speech. there wasn't much for the dollar bulls, we didn't hear much about fiscal stimulus, but the other side of the equation is what's happening on emfx
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itself. in that respect, we have seen an interesting thing in china in particular, a pretty strong, short squeeze in the offshore yuan, limiting moves to the downside. so really, we have trends on both sides of the equation that are making long dollar, short e.m. painful for some fund managers at the beginning of the year. guy: let's talk about the turkish lira. we are finally catching a bid. can i read anything into this, other than the fact that the dollar is going down? tracy: [laughter] yeah, that's right. the turkish lira finally, finally up for a change. what seems to be happening here is a lot of economists are expected that when the turkish central bank meets on thursday this week, they are finally going to raise interest rates significantly. economists are expecting a 50 basis point rate rise, although i saw one estimate from standard
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chartered calling for a 100 basis point rise. away from that, the central bank seems to be implementing all these little things in money market at the margins that are also tightening turkish monetary policy. a sort of stealth tightening that seems to be changing the story for the turkish lira. on that note, it is interesting -- if you look at economist estimates, they expect the turkish lira to gain to about 3.6 by june. it is currently at 3.77 against the dollar. really, a reversal in sentiment. people were very pessimistic on the turkish lira, and that seems to finally be changing. but as you really point out, we will have to wait and see how it plays out. turkey continues to sometimes provide the unexpected. guy: yeah. tracy, great stuff. tracy alloway on the em fx pain trade. stay with us. up next is "surveillance." alberto gallo is going to be
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joining us. i'm going to deliver digital radio. this is bloomberg. ♪
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francine: trumps lump. the president's first few days in office show little deals on plans. the u.k. prime minister will become the first european leader to visit president trump as she heads to washington on friday. how special will the relationship be? and socialist showdown. -- the party presidential candidate. does this change the electoral map in france? good morning, everyone. i'm francine lacqua in london. we have a great show for you. first things


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